A six-word slogan on the Web site of Premier Properties USA Inc. sums up the Indianapolis-based company's approach to
business: "Entrepreneurship with a Bit of Daring."
It's no exaggeration. The company's proposal for Venu--a 2.3-million-square-foot, $750 million development at 86th Street and Keystone Avenue--undoubtedly fits the bill.
Premier is preparing to go head-to-head with Simon Property Group Inc., the nation's largest and most powerful mall developer, across the street from Simon's top-performing The Fashion Mall at Keystone. Taking on Simon in the strongest retail market in its headquarters city is nothing if not daring.
Simon, of course, has no plans to back down. The company responded quickly to Premier's volley. It announced plans to add a second floor to part of The Fashion Mall, an idea that had simmered for years but seemed to gain new urgency after Premier's project surfaced. Simon also has quietly tried to assemble land south of 86th Street for another retail project in an effort that has encountered resistance from some homeowners.
Simon is expected to wield its clout with the nation's top retailers to keep its existing tenants and add more. It's working with locally based Gershman Brown & Associates on its effort to buy 77 condos south of the mall in a community called Lakes at the Crossing.
Premier isn't likely to back down, either. Local brokers are divided over whether a joint-venture partnership could materialize between Premier and Simon, which could be similar to the development arrangement for Carmel's Clay Terrace.
Locally based Lauth, at the time a newcomer to the retail game, had planned to tackle Clay Terrace solo but eventually took on Simon as a partner. Some say Premier CEO Chris White is less likely to cede any control of his project.
While Simon and Lauth were building and opening Clay Terrace, Premier was constructing its own successful lifestyle center, Plainfield's Metropolis. An impressive stable of tenants, including Dick's Sporting Goods, JC Penney, Barnes & Noble and Rave Theater, anchors the open-air center.
"They know what they're doing," said Nick Wright, a broker in the local office of Midland Atlantic who specializes in tenant representation. "They know how to captivate a retail audience. They've nabbed some pretty good names. And if they can do it in Plainfield, they can probably do it anywhere in the world."
Still, Premier is a small player compared to Simon. The developer has built mere millions of square feet since White founded the privately held company in 1993. On the other hand, publicly traded Simon has built hundreds of millions of square feet of retail space since it was founded in 1960.
A Simon spokesman declined to comment for this story. Premier officials directed all questions to White, who was not available to comment.
IBJ first reported on the Venu proposal in May. The plans call for a 24-story office tower, two 10-story residential towers and a 20-story hotel. It would include 650,000 square feet of retail space, a 5,000-seat theater featuring Broadway shows and about 15 restaurants. Premier also plans to include "green" features such as rooftop plants in a bid to secure Leadership in Energy and Environmental Design, or LEED, certification.
The retail portion would be roughly the size of The Fashion Mall, which is 683,000 square feet. The mall's expansion calls for another 150,000 square feet.
The Venu location is one of the best in the city for the demographics retailers crave. In 2006, there were about 25,000 households with a median income of $68,400 living within three miles of the Venu site, according to data from the local office of St. Louis-based Colliers Turley Martin Tucker.
Premier hasn't asked for tax abatements yet, but the city is expecting a request, a spokeswoman said.
Mayor Bart Peterson called Venu an "appealing" development plan for an underutilized corner. He stopped short of a full endorsement of the project since the developers still must seek city approval.
"If we could add to our tax base and bring more job opportunities and retail opportunities to the north side of Indianapolis, I like the idea," Peterson said.
The question is, can Premier line up the tenants to pull it off?
A key factor will be high occupancy at The Fashion Mall and scarcity of raw land to develop, said Sam Smith, CEO of locally based Resource Commercial Real Estate. Smith said Premier wouldn't stand a chance of going toe-to-toe with Simon if Simon had raw land to develop nearby.
"In that case, I'd bet on Simon or Sandor [Development Co.], or others with deeper pockets and tenant relationships," Smith said. "In this case, I think Premier's got the site and a good plan. I do like their chances."
Some brokers say Venu could suck some of the retail strength from Castleton and the 96th Street corridor.
Steve Delaney, a principal with Sitehawk Retail Real Estate, doesn't think so.
"Obviously, there's tremendous demand for retail at Keystone at the Crossing," he said. "This gives potential retailers another opportunity since Simon is virtually 100-percent leased."
With Venu, Premier is taking on more than Simon. It also is competing with dozens of other retail development sites in Carmel and Fishers, said Richard Feinberg, a retailing professor at Purdue.
And while the 86th Street corridor might seem full, projected residential growth in the next 10 to 20 years gives the area a bright outlook when it comes to retail.
"It's a very high-growth 10-mile radius," Feinberg said. "Traffic wise, it's where people are going to be. It's already a strong retail area. Like a magnet, it keeps getting stronger."